When a debtor moves assets, the transfer itself can be attacked. D.C. Code § 28–3104 makes a transfer fraudulent as to present and future creditors where it was made with actual intent to hinder, delay or defraud — or, without proof of intent, where it was made without receiving reasonably equivalent value in the circumstances the statute describes. § 28–3105 covers present creditors and insolvency. The remedies in § 28–3107 include avoidance, attachment, an injunction, and appointment of a receiver.
When is a transfer attackable?
A transfer is fraudulent as to a creditor either where the debtor acted with actual intent to hinder, delay, or defraud, or where the debtor parted with an asset without receiving reasonably equivalent value while thinly capitalized.
(a) A transfer made, or obligation incurred, by a debtor is fraudulent as to a creditor, whether the creditor’s claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation: (1) With actual intent to hinder, delay, or defraud any creditor of the debtor; or (2) Without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor: (A) Was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction; or (B) Intended to incur, or believed or reasonably should have believed that the debtor would incur, debts beyond the debtor’s ability to pay as they became due.
D.C. Code § 28–3104(a)
(a) A transfer made, or obligation incurred, by a debtor is fraudulent as to a creditor whose claim arose before the transfer was made or the obligation was incurred if the debtor made the transfer or incurred the obligation without receiving a reasonably equivalent value in exchange for the transfer or obligation and the debtor was insolvent at that time or the debtor became insolvent as a result of the transfer or obligation.
D.C. Code § 28–3105(a)
What can a creditor obtain?
Remedies reach the asset itself: a creditor may obtain avoidance of the transfer to the extent needed to satisfy the claim, an attachment against the transferred asset, and an injunction against further disposition.
(a) In an action for relief against a transfer or obligation under this chapter, a creditor, subject to the limitations in section 28-3108, may obtain: (1) Avoidance of the transfer or obligation to the extent necessary to satisfy the creditor’s claim; (2) An attachment or other provisional remedy against the asset transferred or other property of the transferee in accordance with the procedure prescribed by sections 16-501 through 16-584; (3) Subject to applicable principles of equity and in accordance with applicable rules of civil procedure: (A) An injunction against further disposition by the debtor or a transferee, or both, of the asset transferred or of other property; (B) Appointment of a receiver to take charge of the asset transferred or of other property of the transferee; or (C) Any other relief the circumstances may require.
D.C. Code § 28–3107(a) — Remedies of creditors
Attachment runs through the procedures at §§ 16–501 to 16–584, as § 28–3107(a)(2) provides. Where a receiver is the right answer see court-appointed receiverships; for urgent applications see emergency injunctions.
What protects the transferee?
These claims are not unlimited, and a page that ignored the defenses would be misleading. § 28–3108 sets out defenses, liability and protection of a transferee, and § 28–3107(a) is expressly subject to it. § 28–3109 governs extinguishment of the cause of action.
Where the debtor is a business owner who took company money, see partner diverting company funds.
How does D.C. law treat a transfer made to defeat a creditor?
Where a debtor moves assets, the transfer itself can be attacked — and the statute supplies both the theory and the remedy. Section 28–3104 does not always require proof of intent; the alternative branch turns on reasonably equivalent value.
| The question | D.C. Code provision | Official heading |
|---|---|---|
| Is the transfer voidable? | § 28–3104 | “Transfers fraudulent as to present and future creditors” |
| What about existing creditors only? | § 28–3105 | “Transfers fraudulent as to present creditors” |
| What can the court order? | § 28–3107 | “Remedies of creditors” |
| What defenses does the transferee have? | § 28–3108 | “Defenses, liability, and protection of transferee” |
| How long do I have? | § 28–3109 | “Extinguishment of cause of action” |
Frequently asked questions
Can we undo a transfer the debtor already made?
§ 28–3107(a)(1) allows avoidance to the extent necessary to satisfy the claim, subject to the limitations in § 28–3108.
Do we have to prove intent?
Not always. § 28–3104(a)(2) and § 28–3105 reach transfers made without reasonably equivalent value in the circumstances described, without requiring proof of intent.
Can assets be frozen?
§ 28–3107(a) provides for attachment and for an injunction against further disposition by the debtor or a transferee.
What if the asset went to a good-faith buyer?
§ 28–3108 provides transferee defenses and protections, and the remedies in § 28–3107 are expressly subject to it.
Who counts as a creditor able to attack a transfer?
Both existing and later creditors, for the intent-based route. D.C. Code § 28–3104(a) makes a transfer fraudulent as to a creditor whether that creditor’s claim arose before or after the transfer, where the debtor acted with actual intent to hinder, delay or defraud any creditor.
Why does it matter when the debt arose?
Because it decides which provision is available. The constructive route in D.C. Code § 28–3105(a) is open only to a creditor whose claim arose before the transfer, and it turns on the absence of reasonably equivalent value plus insolvency — no proof of intent required.
Which court can secure the asset before judgment?
The Superior Court of the District of Columbia. D.C. Code § 16–501 allows attachment before judgment in a civil action to recover specific personal property, a debt, or damages for breach of contract, on an affidavit setting out the grounds of the claim and a stated fact about the defendant.
How much can actually be recovered from the transferee?
Less than people expect. Under D.C. Code § 28–3108(b) the judgment is for the value of the asset transferred or the amount necessary to satisfy the creditor’s claim, whichever is less — and § 28–3108(a) bars the intent-based claim entirely against someone who took in good faith and for a reasonably equivalent value.
Sources and legal authorities
- D.C. Code § 28–3104 — Transfers fraudulent as to present and future creditors
- D.C. Code § 28–3105 — Transfers fraudulent as to present creditors
- D.C. Code § 28–3107 — Remedies of creditors
- D.C. Code § 28–3108 — Defenses and protection of transferee
- D.C. Code § 28–3109 — Extinguishment of cause of action
- D.C. Code § 12–301 — Limitation of actions
General information about D.C. law, not legal advice. Which rule applies depends on the entity, the agreement and the facts.
Related: Partner Diverting Company Funds · Emergency Injunctions · Court-Appointed Receiverships · Contract Disputes · Business Litigation. Call (301) 901-3109 or use the contact page.